Firefighters from Silverwater, Lidcombe and Concord were able to quickly extinguish the blaze.
However, a 39-year-old man who was inside the house suffered “extensive burns” in the fire and was taken to Concord Hospital under police escort with serious injuries.
The injured man’s brother and a third man were assessed by paramedics on the scene but didn’t require treatment.
Detective Inspector Chris Laird from NSW Police said the man’s brother, 46, was “obviously very shocked” about what happened.
“The poor gentleman who’s been badly-burned is definitely not in a position to talk to us at the moment,” Mr Laird said.
“I had a look at him just before he left the scene, and basically it looked like his entire body had been burned from head to toe.”
A Fire and Rescue NSW spokesman said it appeared the fire began in a bedroom on the second floor of the brick and tile cottage.
The injured man was pulled from the burning building by two people who had been driving past and saw the flames.
Fire investigators remained at the scene until around 1pm, when the scene was handed over to detectives.
Police said investigations into the fire, which is not believed to be suspicious, continued on Thursday afternoon.